Floating offshore wind is a key emerging technology that is at an early stage of commercialisation in the UK and Europe. According to the Global Wind Energy Council (GWEC), the technology will triple the size of the addressable global offshore wind market by enabling the installation of wind turbines in water deeper than 60 metres. This has huge potential to increase clean power generation for densely populated coastal areas.

A new UK Government report based on a three-month study by leading energy consultancy Azure International identifies 600GW technical potential for floating offshore wind in China, showing the enormous potential for China to become a future leader in the sector. Harnessing the potential of floating wind power could support China to meet its carbon peaking and carbon reduction targets.

“The UK and China have an established relationship on offshore wind, reaching the eighth annual session of the bilateral Offshore Wind Industry Advisory Group in 2022. Over these past eight years, offshore wind has developed from a niche sector to a booming industry, key for the decarbonisation of power grids across the world, and central to international efforts to limit global warming to below 1.5 degrees,” says John Edwards, Her Majesty’s Trade Commissioner for China.

However, the technology has some big challenges ahead in order to scale, including a lack of special power tariff subsidies and a supply chain that is still largely focused on fixed-bottom wind farms.

China has the world’s largest installed capacity of fixed-bottom offshore wind, at 26.4GW, and a strong armada of tier one manufacturers, supplying turbines, blades, cables, towers and monopiles for projects around the world. Currently, floating offshore wind is at an early stage, with two demonstration projects in the construction phase and six in the design phase. The first floating offshore wind project in China, developed by China Three Gorges Group, went into operation off the coast of Guangdong in 2021. The report identifies 16 sites across four provinces in south-eastern China that have good potential for floating offshore wind, a finding affirmed by the chairman of the China Renewable Energy Engineering Institute (CREEI), Peng Cheng: “China’s expansive coastline and deep waters have a high potential for the development of offshore wind power. In deep waters, floating offshore wind is one of the main methods for development.”

With the largest installed capacity of floating offshore wind in the world, the UK could be China’s key partner to support this development. The UK has two commercial floating wind farms and an ambition to install 5GW by 2030. That ambition is backed by an established pipeline of 11 allocated floating offshore wind commercial sites, totalling 15GW capacity. A thriving ecosystem of universities, innovation hubs, manufacturers and ports are supporting the industry’s development, and the UK Government has ring-fenced £160 million of funding.

The report demonstrates how a strategic partnership between China and the UK could overcome key technology and supply chain bottlenecks to accelerate floating offshore wind deployment. As Li Dan, Executive Secretary-General of the China Renewable Energy Industry Association, comments, “[China and the UK] can draw on China’s relatively complete supply chain system and the UK’s relatively advanced technological capabilities in certain fields to lower the unit investment cost and LCOE of floating offshore wind.” The report also recommends key R&D topics for China and the UK to undertake in order to reduce the cost of floating wind technology, including mooring optimisation, cable dynamics, modular systems, and how to minimise environmental impact. Alongside the potential commercial and technological benefits, this creates the opportunity for greater exchange and understanding between engineers in both countries.

“Offshore wind has developed from a niche sector to a booming industry. I hope that we can implement the report’s recommendations together to develop better technology, a larger global capacity, and stronger industry-to-industry relationships,” says Edwards. Cooperation with the UK to co-develop commercial floating wind projects in China also has the potential to create components, systems, and processes with high export potential. China could have a key opportunity to capture and supply the international market by providing the necessary products to accelerate floating wind deployment around the world.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can help you find the perfect partner or supplier to support the growth of your business in China.

Click to read the full report in English and Chinese.

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When it comes to international relations, many focus solely on the loud noise and high drama of politics. What those commentators may be missing is the quieter, but no less important role of business and commercial relationships. How do British and Chinese people actually work together?  

China is the UK’s third-largest trading partner. The UK and China have a £118 billion trade relationship, which increased by 11.3% year on year in 2021. In many ways, this is a statistic about trust. It shows that there are large numbers of Chinese and British people who know that each one offers a solution to the other’s problem. Even where two people live totally different lives, win-win collaboration can take place.

So, forgetting the “hot air” of politics for a moment, let’s consider the strong winds which will power both country’s energy grids, from Hainan to the Humber.  The China-UK partnership in renewable energy is how I think we can strengthen our cooperation during 2022.

Why is cooperation on renewable energy important to both China and the UK? 

When President Xi Jinping and Prime Minister Boris Johnson spoke during their phone call in the autumn of 2021, they agreed that working together to achieve the transition to a carbon-neutral energy system is a top priority for the UK-China bilateral relationship. A high domestic capacity for renewable energy has many benefits, including a reduction of harm to the population and economy from the effects of climate change and pollution, enhanced energy security, and greater technical capability. 

Following the UN Climate Change Conference of Parties (COP26), hosted by the UK in Glasgow, President Xi wrote to PM Johnson stating that “accelerating the green transition” was a priority for China in tackling climate change. President Xi stated that “successful governance relies on solid action”, expressing a hope that all parties “will take stronger actions to jointly tackle the climate challenge and protect the planet, the shared home for us all.” 

As shown at COP26, solid action and international collaboration is key to the UK approach as well. The UK was the first major economy to make our commitment to reaching net zero carbon emissions by 2050 legally binding, and energy transition is central to our industrial strategy. In our Nationally Determined Contribution (NDC), we have committed to reducing greenhouse gas emissions by at least 68% compared to 1990 levels before 2030. As Boris Johnson said to global leaders at COP26, we must “get to work with all the creativity, imagination and goodwill that we possess.”

How are the UK and China cooperating to build renewable energy capacity?

Fortunately, the UK and China are building from a strong base of existing collaboration. China’s National Energy Administration and the UK’s Department for Business Energy and Industrial Strategy host an annual UK-China Energy Dialogue that will reach its 10^th session in 2022. British Embassy Beijing and the China Renewable Energy Industry Association, in partnership with the China Renewable Energy Engineering Institute, hosted the UK-China Industry Advisory Group on Offshore Wind in 2015, which will reach its eighth session in 2022. In addition, Vice Premier Hu and Chancellor Philip Hammond committed “to deepen the clean energy partnership, and support a structured energy transition” during the 10^th UK-China Economic and Financial Dialogue in 2019.

Over the past decade, the UK and Chinese governments have jointly supported wide-ranging policy and market cooperation. We have supported collaboration on green finance and facilitated knowledge-sharing on innovative market mechanisms. This includes the UK’s Contract for Difference (CfD) competitive auction, competitive power market design and regulation, carbon trading, and renewable energy incentive schemes.

We have also jointly facilitated projects and in-depth discussions on many technical areas, including: the installation, operation and maintenance of deep-far-sea fixed and floating offshore wind projects; energy storage design and deployment; cross-provincial HVDC (high-voltage, direct current) transmission; hydrogen generation, deployment and use-cases; carbon capture utilisation and storage (CCUS) projects; and smart grids and grid flexibility.

This has supported sustained commercial collaboration. The UK government directly supported UK companies to provide an estimated £1.2 billion in renewable energy exports to over thirty projects within China since 2017. We have also supported UK-China renewable energy partnerships around the world. In 2019, the UK Department for International Trade and China’s NDRC signed a Memorandum of Understanding on cooperation in third countries, supporting partnership on sustainable, low-carbon projects built to high international standards. 

For example, we have worked with China’s Shanghai Electric and UK-headquartered Lloyds Register on the ongoing construction of Dubai’s flagship 700MW Mohammed bin Rashid Al Maktoum Concentrated Solar Power (CSP) Park. UK export credit agency UK Export Finance continues to offer financing for renewable energy projects jointly delivered by UK and Chinese partners internationally. 

Investment trends to watch out for in 2022: Offshore wind manufacturing

In December 2021, the Department for International Trade signed a Memorandum of Understanding with Ming Yang Smart Energy Group, providing our support for Ming Yang’s ambition to establish a turbine blade factory, and conceivably, a turbine assembly factory in the UK. Described by UK Trade Commissioner to China John Edwards as “game-changing,” it marks an exciting development in terms of Chinese participation in the UK wind supply chain.

Chinese investment into offshore wind manufacturing builds on an ongoing trend of investment into the UK renewable energy sector over the past ten years. Previously, the majority of Chinese investment has been equity investment into UK offshore wind projects, and, more recently, the development of energy storage projects. For example, the UK Government supported China’s State Development & Investment Corporation (SDIC) to invest in the UK’s 588MW Beatrice offshore wind project and 1GW Inch Cape offshore wind project in 2016, 50MW Afton onshore wind project in 2020 and 72MW Benbrack onshore wind farm in 2021. 

In terms of energy storage, the UK has worked with Huaneng to develop Europe’s biggest lithium-battery storage plant in Minety, England, using Sungrow technology, which was connected to the grid in 2021. And already this year, in February 2022, Trina Storage delivered its first energy storage project in the UK, a 50MW battery facility in the east of England. There are many current opportunities within the UK’s wider low-carbon sector that will be of interest to suitable investors (some online here).

In 2022, we expect further investment into the UK’s offshore wind and lithium-ion battery manufacturing capability. Crucially, the UK has the biggest offshore wind pipeline in Europe and is working with developers to maximise the percentage of UK-based manufacturing and services, with an expectation of 60% local content. Manufacturers like Ming Yang will be positioned to take advantage of this. They join other international investors, including American-firm General Electric and South Korean-firm SeAH, who also announced plans to establish UK factories in 2021.

Thinking beyond 2022: strategic collaboration on floating offshore wind?

Within the renewable energy industry, fixed-bottom offshore wind is already crucial to both the UK and China. We have the world’s two largest offshore wind industries by operational capacity, and both have significant pipelines for future capacity. However, many of the available near-to-shore sites in shallow waters (required for fixed-bottom turbines) are being used up. Floating offshore wind is the next frontier of technology development, with a huge potential to expand. 

Floating wind is an area where the UK can share its experience with China. The world’s first two commercial floating offshore wind farms, Hywind and Kincardine, were developed in the UK, with Hywind in operation since 2017. It has been fantastic to see China National Offshore Oil Corporation (CNOOC) partnering with the UK’s Flotation Energy to co-develop Green Volt, a floating offshore wind project which will be used to electrify the Buzzard oil rig in Scotland. Green Volt is expected to be the biggest floating project in the world once operational in 2026.

The UK has the biggest offshore wind pipeline in Europe and would welcome Chinese engineering and manufacturing for floating turbines and foundations in our offshore wind projects

Partnership with the UK could both help China to scale its floating offshore wind capacity and help the UK to build our supply chain capability. Within China, UK and Chinese developers could work together on projects (with UK developers taking minority stakes). This could help to build on the pioneering work of China Three Gorges and MingYang, who launched China’s first floating offshore wind turbine in Yangjiang in 2021, using Chinese-engineered components. 

The UK would welcome Chinese engineering and manufacturing for floating turbines and foundations in our offshore wind projects, clusters and ports. The UK government ring fenced £24 million in funding per year for floating offshore wind via the CfD scheme in September 2021. Investment in UK-based floating wind manufacturing would give Chinese companies a great basis for bidding into our 8.8GW floating wind pipeline. 

As the world’s two leading offshore wind markets, we should lead by example. We can create mutually acceptable standards for the technology and work together to scale the floating offshore wind industry. There is no solution to climate change without China. May the ferocity of the tiger guide us to develop the renewable energy market with vigour in 2022!

The UK will be running a media series featuring university researchers, policy makers, engineers and business leaders sharing their insights on challenges and opportunities in the green energy and low-carbon industries throughout 2022. Email Elizabeth at elizabeth.daviskumadiro@fcdo.gov.uk or follow DIT’s WeChat account UKCN_Trade_Invest to receive updates.

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In 2015, the UK and China Offshore Wind Industry Advisory Group (IAG) was established to promote commercial, innovation and policy exchanges between both countries on offshore wind and to support the development of offshore wind and reduce its global costs. The IAG is made up of  Renewable UK (RUK) and China Renewable Energy Engineering Institute (CREEI), and more recently, the Chinese Renewable Energy Industry Association (CREIA) has joined as the new leading partner from China.

A recent meeting by the IAG was held to discuss the potential collaboration between the two countries following the 14th Five Year Plan announcement. Britain is a world leader when it comes to offshore wind production, and the skills and expertise that the UK possesses will be in growing demand as China moves further towards sustainable and green energy production.

The 14th Five Year Plan is the new strategic transitional period of the offshore wind power industry, according to Hu Xiaofeng of CREEI. China will strive to achieve a 20GW grid-connected installed capacity of offshore wind power by 2025, which will account for about 6% of the total installed capacity of wind power plants in China.

According to Isabel DiVanna of RUK, the UK’s offshore wind industry already deploys over 10GW of capacity, and the RUK predicts it will reach 40GW by 2030 and 92GW by 2050 – ahead of government commitments of 30GW by 2030, she says.

Britain – as something of a windy island – has been ideally positioned to become a world leader in offshore wind energy production. The UK is currently home to the world’s largest offshore wind sector with 10.1 GW installed, which will rise to 19.5GW by the mid-2020s.

Nevertheless, China is expected to overtake the UK soon, with projections of achieving more than a fifth of global offshore wind capacity by 2030, according to the Global Wind Energy Council (GWEC). These numbers illustrate the UK and China’s complementarity, and the two country’s cooperation, as embodied by the IAG, allows the UK to share its unique strengths, create opportunities, and reach a common goal of accelerating the transition to low carbon.

Li Dan of CREIA explains that one of the challenges of the Chinese market is the need for China to ensure that it improves its quality whilst growing at a rapid rate. She also outlines the importance of market-oriented reforms in opening up new opportunities for investment, which will be important for securing future financing flows. China wants to promote investment and strengthen its industrial chain, so there are ample opportunities for UK-China engagement.

David Findlay of the Offshore Wind Energy Catapult said that heavy investment will be injected into the growth of offshore wind energy production in a bid to meet the UK’s Net Zero 2050 goal. Investment between now and 2030 will total £40 billion, he adds. This provides an interesting opportunity for Chinese companies, including developers, investors, OEMs and supply chain engagement.

The Prosperity Fund supports the UK-China Clean Energy Partnership and contributes to China’s transition to a low-carbon economy. Similarly, the British embassy has also been working closely with China’s National Energy Administration and CREEI on developing offshore wind projects to generate policy impact on China’s renewable energy development without subsidies.

Prosperity Fund projects have recently included case studies of UK offshore wind projects, recommendations on improving China’s policy framework, a framework for the localisation of the UK’s successful Offshore Wind Accelerator programme, studies on investment risk for Chinese investors in offshore wind, a proposed cost-reduction framework for China’s offshore wind sector, and policies and policy recommendations for Jiangsu and Guangdong provinces.

Following this series of successful meetings and follow ups from the IAG, a number of plans will be put in place to forge closer ties: further exploration relating to new technology such as distributed energy and hydrogen production, health and safety requirements and government regulations as well as further funding with green finance.

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